Japan Hands on Assignment

Japan is an ancient society who has sought to modernize itself since WWII due to American influence. Their blend of the tranquility of the past and the amenities of the future have made them a market to which many companies in America as well as around the world have looked to have their staple in the economy. The country is constantly growing and has economic stability that looks to last for a very long time. This creates a great opportunity for new companies to come in because they are very aware of foreign products and tend to embrace them but also may cause a problem due to their loyalty to the existing products in the country if they don’t understand the people and culture. If a company learns how to understand the culture then they will become successful. This artificial intelligence company should enter the market due to the growing interest in technology and lack of competitors in the field.     
Japan is 364 thousand square kilometers which is split up into 6800 islands located in East Asia surrounded by the Pacific Ocean. 97 % of its land mass is made up of four islands, Honshu,Hokkaido, Kyushu and Shikoku. Honshu is the island where the capital city of Tokyo is located. The country is scarce on resources with few minerals but have a large supply of fish which is the reason for their countries most popular food being sushi and sashimi. However when it comes to exports they have shifted from agricultural exports to manufactured goods such as cars and technology. In 2016 the Observatory of economic complexity reported  that cars make up 15% of exports, while technology the second highest export takes up 4.9%. The top three import destinations come from the United States, China and South Korea. The United States imports gas turbines while China and South Korea imports integrated circuits. The top imports are crude petroleum and Petroleum gas mostly from Middle Eastern countries such as Saudi Arabia who makes up 34% of resources, the United Arab Emirates with 25% and Qatar with 8.9%. The top exports come from China, the United States and Australia.China mainly imports telecommunications equipment, while the United States and Australia import automobiles from Japan. Japan generally has low importing tariffs. However, they will favor Japanese products by implementing certain requirements such as, having to have prior experience as well as favouring local produced products.
The capital Tokyo, is one of the most industrialized cities in Japan and is where many businesses seek to find a new market also it is the highest populated and largest metropolitan city in the country and the world. Japan overall as a country is the 10th most populated country in the world of 126.8 million people making up 2 percent of the world’s population.This population has been in decline with an estimated decrease in population of 0.242% due to failing birth rate. The country encouraged to have children under the Angel Plan by being given children child allowances and free childcare programs. The demographics of Japan are 98.5% Japanese, 0.5% Korean, 0.4% and 0.6% other. This homogeneous population makes the main language spoken in Japan being Japanese which is spoken by over 125 million people. Increase in globalization after the end of their self imposed isolation in 1853 English, German,Portuguese Russian, Spanish and French  and English are the main foreign languages spoken throughout the country. The major religions being Shintoism and Buddhism which is practiced by 84% of the population. This is different from America where there is one dominant religion which 78% of American Adults practice Christianity exclusively. Shintoism dates back to ancient times, Shinto believe that the world possesses “Kami” which is a Shinto deity, divine spirit or spiritual energy after death. These divine spirits take the form of concepts important to life such as wind, rain, mountains, trees, rivers and fertility. Humans become “Kami” after death and live in another world. The Shinto’s job is to protect and encourage the living as long as they pray and perform rituals for them. The other major religion, Buddhism was introduced by the Chinese in the sixth century during the Sui Dynasty. These two religions are non-conflicting today with many people practicing both religions. The Shinto religion deals mostly with values of life while Buddhism deals with death. This is extremely different from American religion where they practice only one religion which deals with both. A buddhist funeral is simple and quiet to show respect as well as bring honor and comfort to the surviving family and friends by creating a positive environment to assist the spirit with leaving the world. This separation of the two has changed since the 19th century because the Shinto religion has spread through Japan and has now taken care of life and death. Shinto funerals provide a connection to the “Kami” and purify contaminants through death. This is an extremely long process of twenty steps which are meticulous and must be done properly by a Shinto priest. These values of honoring family ancestors have been integrated into the family structure of homes over the centuries.
Household family structures have made a drastic change over the decades from the multi-generational model which was practice by previous generations because of the Shinto and Buddhist religious value of staying near and honoring family to the American “nuclear family” model with only a mother, father and children. This structure grew in popularity because of the greater self-reliance after the boomer generation after WWII in the late 1940’s creating a housing boom due to the increase in births. Despite the change in family structure children remain the center of the family structure creating strong bonds early on in life particularly between mothers and their children. This makes it tough sometimes for children to adapt to leaving the home. The basic school system structure is identical to the American model where elementary and middle school is required. Elementary school is from first to sixth grade. This is  followed by three years of middle school.The difference is in high school where they are not required but 98% of students still go to it and need to take an entrance exam in order to be admitted. In school they learn Japanese, math, science, social studies, music, crafts, physical education, and home economics. Schools are slowly integrating English and Information Technology classes. The biggest school event of the year is sports day where students are split into teams and participate in tug-of-war and relay races, excursions to historical sites, and arts and culture festivals featuring dancing and other performances by children In middle school and high school they are required to wear uniforms and almost all schools participate in club activities such as sports, music or science. The school system in Japan is ranked third in the world only behind Finland and South Korea. These high education standards leads to a 99% literacy rate among the population. According to a Stanford study Japan has three million college students in over 700 different universities nationwide making it the second largest college system in the world behind the United States. Although the school system is so large college is seen as a college experience opposed to the educational experience of primary and secondary schools. However, this has been improved since the 1990’s because of the globalization of business. In order to further this growth the government has created new initiatives to increase educational opportunity. Japan is ranked 7th in the world and  has increased their Hays Global Skills Index score by 0.2 since 2017. This measurement indicates how easy it is for a country to attract the most talented workers with Luxembourg and Sweden at the top of the list. Japan is attracting more talented workers because of their increase in wages for highly skilled workers and the highest wage pressure in the world. Household income in Japan is on average 28,641 US dollars a year which is lower than the Organisation for Economic Co-operation and Development average of $28,641. The average net-adjusted disposable income of the top 20% is estimated to be $64,103 while the bottom 20% are estimated to make $10,045 a year with an inflation of 1.2% in 2018 and is supposed to reach a high 1.66% by 2020 but drop to 1.21% by 2022 according to statista.com. According to investopedia.comAs of December 7, 2018 the dollar could buy 112.81 Japanese yen rising about a quarter of a percent against the dollar. The Japanese yen is a significant currency in Asia and although there is a threat of the Chinese Yuan in order for them to be a threat it still will take a couple of years. Japan very high debt levels but this is counteracted by their high trade surplus which make it a safe place to do business. However, their workforce is getting older, the rising significance of China as well as the low consumer and business confidence may threaten that position.
This uncertainty has an effect on the family structure of  houses today. They are still trying to keep traditional values while becoming more modern as well by providing houses in sets of two. For example, one house will have two kitchens, two living rooms etc. This allows many generations to live together while giving a sense of independency between families. This self reliance and independence has carried over to the modern marriage rituals and customs which is now based on mutual attraction opposed to the previous model of “ arranged marriages”.  This new structure of choosing to marry those who you are attracted to is similar to America but the housing structure of not moving out is drastically different because in America it is common to be independent when considered an adult at 18 years old. Previously women have not had a voice in the household and only took care of household matters and were expected to be subordinate to men. This all ended after WWII in 1947 when a new legal framework was created making equality for both sexes giving women more access to education, job opportunities and career advancement. Although there is this progression there is little progress when it comes to gender gap, equal pay and educational attainment and still remains a “dream” opposed to a “norm”.
Japan is a highly non-verbal communicative society and this is a drastic change compared to the American society which is a more verbal communicative society. Japanese participate in this non-verbal communication because of what scholars refer to as a high degree of share context. Their style of communication is called ichi ieba ju wakaru or as “hear one understand ten”. This is illustrated through facial gestures or through a tone of voice to convey emotion which carries out not only in the household but throughout society. In Japan words only convey 10% of the information while non-verbal cues and tone account for 90% of the information of a conversation. In Japan non-word sounds may include hissing, grunting, growling and sighing. The most common one is hissing by expelling air through the gaps in the teeth. This indicates displeasure in an idea or suggestion. Japanese constant non-verbal communication makes them seem forbearing, however their non-verbal cues are very expressive. Facial gestures are also a key part in communication in Japan  such as a raised eyebrow or downturn of the edge of the mouth which can indicate if you forgot to do something. Verbal words may also have multiple meanings, for example hai. In some contexts hai may mean yes or may simply mean that they understand what you are saying, this is often accompanied by a bow of the head which makes it extremely difficult to understand the meaning so asking for clarification is best. These non-verbal communication is highly contrasting to America because in America they will say what’s on their mind while in Japan business people must pay attention to nonverbal subtleties so this may be an issue for American companies. In order to create a better understanding American companies must ask probing questions when wanting more information so there is no misunderstanding in the end but also leave enough silence to not overwhelm them with questions and also be aware of any non-verbal cues to help foreigners “read between the lines”.
When conducting business in Japan business people should dress formally and display a conservative demeanour. If one is brash and abrasive it can result a lack of trust and respect. When entering one must wait to be seated from the host and it is very important to where people sit and position of the table is based on status with the highest ranking official sitting at the head of the table with his subordinates sitting on both sides of them descending by rank. When coming in it is rude to initiate and action and a foreigner must wait to be directed to start and must follow suit. When in the meeting one must show high interest and it is encouraged to take notes in blue or black ink but never in red, because it signifies bad luck and death. Other things that should be done in business meetings is to repeat previous ideas to show involvement and interest in the conversation. In the first meeting is extremely in important in establishing a relationship. In japan the ritual of the first meeting is more formal where it starts with an exchange of business cards is a part of the ritual and is given after bowing and introductions. On the business card it should be double sided to be written in English and Japanese and should be offered with the Japanese side facing up the cards should be received with both hands demonstrating great respect and cards will be offered to in order of ranking with the highest ranking official offering his card last. Gifts may also be given at the meeting which is common but the gift should not be opened until you have left the meeting if the gift is wrapped this is to save embarrassment if the gift is not liked by the recipient. Gifts must also be presented like business cards with both hands and humbly given as a “small token” or as an “insignificant gift”. The gift may be modestly declined but one should insist upon them to accept if it is declined two or three times then one should retract their gift. A gift should be given to all people in the meeting with increasing value in gifts based on rank. When wrapping the gift presentation is key, the gift should be boxed and beautifully wrapped but never in white paper because it symbolizes death and should be carried discreetly. Gifts involving the foreigners host culture are appreciated as well as gifts given in pairs are suggested because they are seen as lucky except for thing in sets of four or nine, four is extremely unlucky because it is pronounced “shi” which is similar to the word . Knives and scissors should be avoided because they symbolize the severing of ties.
Japan’s government is structured as a constitutional monarchy. With a parliamentary regime. There are two heads to the government in Japan. The head of state is the emperor who takes care of ceremonial duties. The Government is broken up into two branches the Executive Branch and the Legislative Branch. The Executive Branch is rna by the head of the government who is known as the Prime Minister. The Prime Minister serves a four year term and is able to enact executive actions. These actions include implementation of the law and running day-to-day activities. The Prime Minister is also able to appoint a cabinet who will be able to help him achieve the goals and maintain the government.  The Legislative Branch is a bicameral system ran by a parliament or otherwise known as a National Diet. This National Diet consists of an upper and a lower house. The upper house is made up from the House of Councilors which is made up of 242 members who are voted for six year terms by popular vote. The lower house is made up of the House of Representatives. The House of Representatives is made up of 475 members elected to four years terms by popular vote. The National Diet is the highest organ of state power making the making the executive branch directly and indirectly dependent on it. The job of the government is to make sure that the country is running smoothly especially its economic structure which involves keeping track of trade agreements. According to the International Trade Administration Japan has 14  Economic Partnership Agreements or (EPA’s) as well as ASEAN countries which is made up of 11 other countries as of July 2017. With a large access to many different companies want to be involved with Japan and their business. In order to make sure that Japan is running all business operations with no corruption the government monitors businesses in many different ways. The way to measure corruption in a country is through the corruption index.In Japan their score is 73 meaning it is not completely clean and there is still a good amount of corruption within the government. When it comes to public entities such as police or public services there is a low risk of corruption. According to business anti-corruption portal only one in ten citizens perceive the police as corrupt. This low percentage is due to the systems put in place by the police such as effective methods to investigate and punish abuse and corruption which minimizes the risk of police being able to get away with corruption. Although these systems are in place local public safety commissions allegedly lack independence or adequate authority over police agencies. Other sectors that are safe of corruption is in tax administration where there is a very low risk. One in twenty perceive or tax officials most or all tax officials as corrupt.  Tax evasion is highly monitored with the Japanese Times reporting that 132 cases being prosecuted by the public prosecutors in 2017 amounting to 12.3 billion Japanese Yen. Although there is low corruption in many sectors of the Japanese government there is one part of the government where there is moderate risk and that is in public pronouncement. One type of corruption prominent in Japan is bid-rigging or as known in Japan, Kansei Dango. This is due to the risk in public procurement due to tight patronage networks. Japanese companies, politicians, government organizations, and universities create an environment where in which contracts are awarded within a tight circle  of local stakeholders to the disadvantage of foreign investors, but has decreased in the past decades.
To fight corruption the Japan Fair Trade Commision has been established but the consequences for “bid-rigging” may not be strong enough.  The main legislation to fight corruption is the Unfair Competition Prevention Act. Under this act there are three following acts to help support it, The Companies Act, The Ethics Act and The Whistle-Blower Protection Act. The Companies Act is used to fight corruption in the private sector, what the act does is it provides penalties for the active or passive bribery of high level officials of stock corporations. The Ethics Act applies to individuals and its goal is to prevent individuals to give gifts to mid and senior level officials and gifts exceeding five thousand Japanese Yen must be disclosed and registered. Violators can receive a maximum imprisonment of five years and a 2.5 million Japanese Yen fine. The final act is the Whistle-Blower Protection Act provides protection to whistleblowers in the private and public sectors.
In Japan U.S. patents and trademarks are not carried over into the country. This means that “International Copyrights” that should protect the company from losing their patent does not apply and the company must file their patent and trademarks in Japan. For a company and specifically the owners this can become an issue when getting into a new market because if they are not quick about filing patents and trademarks they may lose out on being able to sell their product in the country. Other risks may be in trusting other people with filing the paperwork for them because they may file it under their own name. If this happens then it the patent or trademark will be that persons property and the original owners can not do anything about it.  This means when establishing patents and trademarks either do it yourself or find someone that is very trustworthy. In order to enforce these patents, trademarks as well as other contracts. Japan has a detailed way of protecting these legal documents. These protections and details include, when rights are exercised, what the performance of the obligation is as well as how contracts can be cancelled. These detailed laws make it easy for companies to understand what they are getting themselves into when they get into a contract in Japan.
The Japanese form of government is extremely stable being one of the world’s most successful democracies and third largest economies in the world behind the United States and China.  This has been accomplished by government driven industries, a highly motivated ethic, and mastery of advanced technology. The biggest sector of exports in Japan is their services sector which contribute to 72% of their GDP which is made up of banking, insurance, real estate, retailing, transportation and telecommunications. This industries contribute to their low unemployment rate of 4% and the highest salary per hour in the world.  In the workforce there is a moderate power distance of a score of 54. This score means that there is moderate inequality in the society and they are aware of their hierarchical position in the society. This type of work environment means that all levels of a business must approve of a decisions before any action is made which can make the process slow this also means that no one level of the chain is more powerful than any other which makes their power distance moderate. Other characteristics of a Japanese workforce is its collectivist society, they will put the cohesiveness of the group above their individual opinions and have a strong sense of shame for losing face. However, compared to other Asian countries they are seen as an individualism society because their sense of community and helping the society stops at work and does not lead in to the home. One example of this is their lack of establishing a extended family system like countries like China and Korea. Japanese are extremely loyal to their companies which may make them seen as collectivists but they do this because of their inner choice and not a sense of obligation to others which makes it an individualistic decision to the Japanese people.Even though they have a conflicting image when it comes to whether they are individualistic or collectivist society because of different standards in the east and west there is no conflict on its masculinity index. Japan is the most masculine society in the world with a score of 95. However, their masculinity is not shown in the traditional way that is thought of as assertive and competitive individually, but as severe competition between groups which allows for a collectivist masculine society which would otherwise seem paradoxical.  At a very young age they are taught this in schools by something called sports day which was established because of the Olympics. On this holiday the school is put into two seperate teams and they compete and they try to promote health in the body and physical activity. This carries into the corporate world where they are most motivated when they are in a winning team which they look excellence and perfection in everything. This has created a“workaholic”society where they work hard and for long hours. The uncertainty avoidance is at a very high level at 92. Japanese do not like to not have all the information and this is attributed to the constant waves of natural disasters. The country must constantly be prepared for the unknown of nature so when it comes to business they want to be as prepared as possible. This is carried on so much in the society that at any special gathering people are told in “etiquette books” what they should wear and how they should act in great detail. This uncertainty avoidance is the reason that they are not accepting of change and it is difficult to implement. Japan scores an 88 when it comes to long term orientation. This means that they are patient on seeing results in their efforts and immediate satisfaction is not needed. The Japanese view their life as a small part of human history so they can only do their best to live the best that they can. Japanese do not live their virtues based on any single god but by virtues and practical good examples. In business this means that they are highly invested in projects and will not give up even if they encounter problems such as economical hardships and look for steady growth of the market instead of short term quarterly earnings. Their philosophy is not to make money for shareholders every quarter but serve the stakeholders and society as a whole for many generations.
The best way to enter a Japanese market is through license trademark  franchising. The reason this is the best way to enter the market of Japan is because of the massive changes in culture between Japan and the United States, when it comes to religion, family values, and overall business operations. These barriers take too long to overcome with just the team from the United States and with a rapid moving culture like Japan any mistake can cause a company to lose the entire market. This method allows the firm to sell its product to Japan but will be sold by franchisees who know the culture of the people. Vodafone is a mobile calling company which originated in the United Kingdom on January 1, 1985 with over 500 million customers in Europe, the Middle East, African and Asia Pacific. On October 12, 2001 Vodafone acquired Japan Telcom by buying 1.13 million shares and easily gaining control of the company. At the time Japan Telecom was one of the largest phone carriers in Japan but the reason for the failure of Vodafone is because of their lack of investment for infrastructure investment and the lack of understanding of how large Japan’s telecommunications market and lack of knowledge of the sector. Vodafone chose to focus on global roaming calls and marketed on DocoMoco which only had 30,000 roaming subscribers out of 50 million subscribers which is only about 0.1% of the users. Vodafone’s other huge mistake was they wanted to grow the prepaid market and almost at the same time Japan made it illegal to have prepaid phones because of the link between prepaid phones to crime. In order to try and fix everything Vodafone tried to bring in expensive expatriates to try and fix the problem. The issue with this is that these expatriates knew nothing about the country which made it impossible for them to fix the problems of the company. In contrast a company with success in Japan is Skymind Inc. Skymind Inc.is ran by the CTO Samuel Audet and CEO Adam Gibson their focus is on the development and sales of business intelligence and enterprise software using deep learning AI technology. They used this technology in Japan in 2016 to detect fraud using company software. Their choice in Japan was due to Samuel’s connection to the country ten years prior by being a national scholar student and worked in a Japanese software company which makes him very familiar of the language, culture and business environment. Other reasons for their entrance into the market was a great infrastructure unparalleled anywhere on the planet and easily forecastable growth. The business opportunity is great in Japan because there is a lot of data in the tech company software and few people who are in the AI deep learning field.  As of February 2018 capital reached almost 10 million Japanese Yen. Their way to success though was by hiring a Japanese staff who knew the culture and doing a ton of research on their own. Another key to success was being Adopted in the company JETRO’s subsidiary program in the fall of 2016. This partnership allowed large Japanese companies to trust Skymind and also introduced them to real estate agencies, administrative management system for documents, notes and metadata as well as incentive information and much more. Support from other companies as well as understanding the business environment and culture is a huge part of a successful business.
Japan is a established and growing economy to where companies can grow and thrive in as long as they get to know about the customs and culture and how their business model applies to Japan. Things to keep in mind and unique about the culture is all of the business practices and rituals needed in order to establish and maintain relationships and to make sure to pay attention to the little things people do because these will tell you everything that one needs to know about a person opposed to the words they say. Knowing to be very observant about body language and facial cues companies should use this to their advantage and focus on developing relationships to create partnerships in the beginning so that they can gain a foothold in the market and then begin to establish their brand as an individual once they have gained traction with the people. This presents a challenge because companies must find the right partner that matches their business as well as the culture of the people. If a company does not find the right partner then they will fail.


































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